D?
VE
RO
PP
_A
IA
UV
ST
, AUDITING: A RISK-BASED APPROACH
12e ||ZEHMS, GRAMLING, RITTENBERG||
Solutions for Chapter 1
Solutions Manual Reconciliation from 11e to 12e
ST
Question # for 11e Deleted/replaced/updated/new? Question # for 12e
1 1
2 Deleted & replaced with 2
question about regulatory
UV
enforcement
3 3
4 4
5 5
6 6
IA
7 7
8 Updated from a generic 8
question to one specifically
_A
focused on the Theranos
fraud.
9 9
10 10
11 11
PP
12 12
13 13
14 14
15 15
RO
16 16
17 17
18 18
19 19
20 20
VE
21 21
22 Updated to reflect 2021 22
IESB Code of Ethics.
23 23
D?
24 24
25 25
26 26
27 27
28 28
29 29
1-1
, 30 30
40 Changed order of learning 31
objectives; same question
41 Changed order of learning 32
objectives; same question
42 Changed order of learning 33
objectives; same question
ST
31 34
32 Updated – added additional 35
content on poor judgments
as documented in a
UV
PCAOB enforcement
release
33 36
34 37
35 38
IA
36 39
37 40
38 41
39 42
_A
New fraud case about 43
Elizabeth Holmes &
Theranos
43 44
PP
44 45
45 46
46 47
47 48
RO
48 49
49 50
50 Updated to a 2021 PCAOB 51
enforcement case
illustrating the same points.
VE
New case investigating the 52
outcome of the
Holmes/Theranos trial.
New case simulation on 53
data analytics and CPA
D?
exam written
communication.
51 Deleted Academic
Research case; eliminating
this feature.
1-2
, 52 Deleted Academic
Research case; eliminating
this feature.
Answers to Check Your Basic Knowledge Questions
1-1 T
ST
1-2 F
1-3 d
1-4 b
1-5 T
UV
1-6 F
1-7 a
1-8 b
1-9 T
1-10 F
IA
1-11 d
1-12 c
1-13 T
1-14 T
_A
1-15 b
1-16 d
1-17 T
1-18 F
PP
1-19 d
1-20 c
1-21 T
1-22 T
RO
1-23 b
1-24 a
Review Questions and Short Cases
VE
1-1
The objective of external auditing is to provide opinions on the reliability of the financial
statements and, as part of an integrated audit, provide opinions on internal control effectiveness.
The value of the external auditing profession is affirmed when the public has confidence in its
D?
objectivity and the accuracy of its opinions. The capital markets depend on accurate, reliable,
and objective (neutral) data that portray the economic nature of an entity’s business and in turn
provide a base to judge current progress toward long-term objectives. If the market does not
receive reliable data, investors lose confidence in the system, make poor decisions, and may lose
a great deal of money; ultimately, the system may fail. By providing an independent audit
1-3
VE
RO
PP
_A
IA
UV
ST
, AUDITING: A RISK-BASED APPROACH
12e ||ZEHMS, GRAMLING, RITTENBERG||
Solutions for Chapter 1
Solutions Manual Reconciliation from 11e to 12e
ST
Question # for 11e Deleted/replaced/updated/new? Question # for 12e
1 1
2 Deleted & replaced with 2
question about regulatory
UV
enforcement
3 3
4 4
5 5
6 6
IA
7 7
8 Updated from a generic 8
question to one specifically
_A
focused on the Theranos
fraud.
9 9
10 10
11 11
PP
12 12
13 13
14 14
15 15
RO
16 16
17 17
18 18
19 19
20 20
VE
21 21
22 Updated to reflect 2021 22
IESB Code of Ethics.
23 23
D?
24 24
25 25
26 26
27 27
28 28
29 29
1-1
, 30 30
40 Changed order of learning 31
objectives; same question
41 Changed order of learning 32
objectives; same question
42 Changed order of learning 33
objectives; same question
ST
31 34
32 Updated – added additional 35
content on poor judgments
as documented in a
UV
PCAOB enforcement
release
33 36
34 37
35 38
IA
36 39
37 40
38 41
39 42
_A
New fraud case about 43
Elizabeth Holmes &
Theranos
43 44
PP
44 45
45 46
46 47
47 48
RO
48 49
49 50
50 Updated to a 2021 PCAOB 51
enforcement case
illustrating the same points.
VE
New case investigating the 52
outcome of the
Holmes/Theranos trial.
New case simulation on 53
data analytics and CPA
D?
exam written
communication.
51 Deleted Academic
Research case; eliminating
this feature.
1-2
, 52 Deleted Academic
Research case; eliminating
this feature.
Answers to Check Your Basic Knowledge Questions
1-1 T
ST
1-2 F
1-3 d
1-4 b
1-5 T
UV
1-6 F
1-7 a
1-8 b
1-9 T
1-10 F
IA
1-11 d
1-12 c
1-13 T
1-14 T
_A
1-15 b
1-16 d
1-17 T
1-18 F
PP
1-19 d
1-20 c
1-21 T
1-22 T
RO
1-23 b
1-24 a
Review Questions and Short Cases
VE
1-1
The objective of external auditing is to provide opinions on the reliability of the financial
statements and, as part of an integrated audit, provide opinions on internal control effectiveness.
The value of the external auditing profession is affirmed when the public has confidence in its
D?
objectivity and the accuracy of its opinions. The capital markets depend on accurate, reliable,
and objective (neutral) data that portray the economic nature of an entity’s business and in turn
provide a base to judge current progress toward long-term objectives. If the market does not
receive reliable data, investors lose confidence in the system, make poor decisions, and may lose
a great deal of money; ultimately, the system may fail. By providing an independent audit
1-3
